Resolving Liquidity #8: Magma Finance

A hot ball of liquidity will flow into the Entangle ecosystem with our newest partner, Magma Finance.

Positioned on Mantle, one of the hottest Layer 2's right now, Magma Finance is looking to advance DeFi by providing solutions to increase utility of users' assets.

With the purpose of serving protocols and users with deep liquidity, a synergetic match exists with Entangle, as our goal is to resolve liquidity both intra-chain and cross-chain.

Entangle Partners With Magma Finance

Magma Finance operates as a DeFi hub, striving to create a balanced environment for traders, liquidity providers, and protocol owners. Its primary vision is to provide optimal liquidity to ensure the best trading experience.

Inspired by Solidly's vote-escrow model, Magma Finance employs veMAGMA tokens to control emissions allocated to liquidity pool gauges. This unique model rewards long-term supporters and aligns various stakeholders by incentivizing rewards to active and useful pools.

Challenges in DeFi

Bootstrapping Liquidity

The classic chicken-and-egg problem with DEXs regarding liquidity and trading volume is addressed by Magma Finance's intelligent incentivization. By strategically positioning liquidity to where it's needed, it prevents wastage and overpaying for unutilized liquidity.

Aligning Incentives

Borrowing from Curve's gauge model, Magma Finance innovatively aligns incentives by allowing governance token holders to vote for pool rewards. Through the purchasing and locking of veMAGMA tokens or offering bribes, protocols can test and adapt their liquidity strategies. This alignment ensures that liquidity is efficiently moved to where it's most demanded.

Liquidity Resolved

Integrating this suite of tools into a single framework allows users increased ease in trading their preferred assets. However, our aim goes beyond just mere convenience; we strive to introduce a novel approach to the utilization of Magma's assets.

Entangle is set to integrate and collaborate with MagmaFi on several vectors, the Entangle Oracle Solution and our native dApp, Liquid Vaults.

Through Liquid Vaults, Entangle will integrate MagmaFi liquidity pools to offer greater capital efficiency for MagmaFi users as well as capital retention for MagmaFi.

An example user-journey is explored below:

1. User provides Liquidity to MagmaFi; for example MNT & USDC.

2. User is given an LP Token in return from MagmaFi as a receipt for provided liquidity.

3. User stakes the LP Token through Entangle.

a. Entangle stakes the LP Token in a MagmaFi Yield-farm and auto-compounds it in a separate smart-contract.

b. User is issued an LSD, a Liquid Vault, as a receipt for staked LP Tokens.

4. User can now use the Liquid Vault for further DeFi to obtain capital efficiency or supercharge yield by utilizing it on partner protocols!

Entangle's Oracle Solution is set to bring multifaceted enhancements to Magma Finance. This collaboration includes acting as a data oracle for assets on MagmaFi's future Money Markets Products, where users will be able to do Lending & Borrowing on a number of assets.

Together, Magma Finance and Entangle's joint efforts are poised to refine efficiency and adaptability within the DeFi ecosystem.

About Magma Finance

Magma Finance is a DeFi hub on the Mantle network's layer 2, providing efficient liquidity with an automatic market maker (AMM). By aligning interests of traders, liquidity providers, and protocol owners through a governance voting system, creating an ecosystem of products.

About Entangle

Liquidity Resolved.

The interoperable layer that enables web3 DApps and protocols to scale with omnichain liquidity.